Unilever PLC

Hello and welcome to Unilever's third quarter trading statement for 2025. Thank you for being with us today. I am joined here by Srini Patak. Srini's appointment as Chief Financial Officer was confirmed by the Board last month following an extensive search process. Srini's vast experience and expertise are great assets for Unilever and I am really delighted we will keep building on the strong partnership that we have formed. In a moment, Srini will take you through the details of the third quarter results. First of all, let me highlight the key elements of our performance as I said. We have delivered a good quarter with 4% underlying sales growth and acceleration of volume growth to 1.7% for Unilever, excluding ice cream, despite subdued markets. Growth was broad-based across all business groups, with each of them delivering underlying sales growth about 3%. This performance keeps Unilever on track to meet our full-year outlook and is evidence of our powerful innovation, improved execution and significant shift into premium segments and fast-growing channels. It is also fully in line with the priorities we have set for the business. For example, our major growth engines – beauty and wellbeing and personal care – deliver particularly strong performances. Our power brands continued to outperform, delivering 4.4% growth in the quarter, with volumes up 1.7% for total group and 2.2% excluding ice cream. We also saw a continuation of sustained strengths in developed markets, particularly North America. Volume-led growth in that region was 5.5%, and it was driven by personal care, an improved performance in Prestige Beauty, and once again, exceptional delivery in wellbeing. Europe grew underlying sales by a competitive 1.1%, despite a strong comparator. Structurally, our business in Europe continues to improve and strengthen. Our emerging market business has stepped up with 4.1% USG, led by a return to growth in Indonesia and China. Overall, emerging markets grew well, despite the short-term impact of the goods and service tax reforms in India and some challenges in Latin America. We have delivered these results while preparing our ice cream business for the merger, which we expect to be completed before the end of the year. The timeline is being revised as a result of the US government shutdown impacting the work of the SEC. She will say more about the final stages towards the merger in a moment. In summary, a positive set of results this quarter that reaffirm our confidence in the steps we have taken to make Unilever a true marketing and sales machine. They will continue to guide and inform our actions over the quarters ahead. With that, I will hand over to Srini to take you through the third quarter results in detail. And after that, I will come back to say something about the remainder of the year and beyond, and also provide a brief wrap-up. We will then take questions. First of all, over to Srini.

Thank you, Fernando. Unilever's underlying sales growth in third quarter was 3.9%, with broad-based progress across the business groups. Underlying price growth was 2.4% and volume contributed 1.5%. This resulted in a two-year compounded annual volume growth rate of 2.6%. We expect the ice cream demerger to be completed in 2025. In this context, excluding ice creams, Our underlying sales grew 4%. Volume in the quarter was 1.7 compared to 1.1 in the previous quarter. All the four business groups delivered positive volume growth with a two-year compounded annual volume growth rate of 2.4%. Our power brands, which represent over 75% of our turnover, grew 4.4% in the third quarter, including 1.7 from volume. Power brands, excluding ice cream, delivered 2.2% volume growth in line with our medium-term volume ambition. Strong performances included double-digit growth from Vaseline, Liquid IV, Nutrafol, Sif, and Domestos, and high single-digit growth from Comfort, Oli, and Cornetto. Dove, our biggest brand, keeps outperforming the market with a 6% USD in the quarter and 8% year-to-date. Before turning to the business groups, let me first provide some color on our performance across different geographies. Developed markets continue to perform strongly. North America grew underlying sales by 5.5% with 5.4% from volume, reflecting the continued benefits of our multi-year portfolio transformation. Growth was driven by strong performances in our personal care and well-being brands underpinned by premium innovations. This marks the fifth consecutive quarter of robust volume-led growth in North America, supported by share gains across key categories and sustained brand investment. Europe grew underlying sales by 1.1%, with a 0.6% decline in volume and 1.7% growth from price. Our performance was broad-based and robust, given high competitors of over 6% growth. We gained share across major markets, power brands, and multi-year premium innovations, including the rollout of Wonder Wash and SIF Infinite Clean continued to perform well. Asia Pacific Africa delivered 6.8% underlying sales growth, with 3.5% from volume and 3.1% from price. This is a clear acceleration versus the first half, reflecting an improved performance in key markets and a stronger execution across categories. Indonesia returned to growth as we saw the benefits of the extensive business reset we have undertaken. Strengthened brand plans, sharper channel execution, and renewed customer partnerships are driving improving trends. Sequential improvements in run rate position Indonesia for sustained progress into 2026. In China, while the market environment remains subdued, we delivered low single-digit growth supported by innovations within our key brands and interventions in pricing. The macro environment in India continues to be favorable. Earlier in the year, personal income tax and interest rates were lowered. In September, the government reduced GST or sales taxes to 5% on around 40% of our portfolio, making the affected products roughly 10% cheaper. While these changes are expected to improve consumption through higher disposable income and improved sentiment, Q3 sales were temporarily impacted as trade reduced inventories and consumers delayed purchases in anticipation of lower prices. Trading conditions are expected to normalize from November onwards. Underlying performance was driven by premium portfolios in beauty and well-being and personal care. Turning to Latin America, underlying sales declined by 2.5% in third quarter with a 7.3% decline in volume, partly offset by a 5.2% from price. Markets across Latin America are experiencing a broad-based softening, reflecting continued macroeconomic pressure on category growth and consumer demand. In Brazil, our focus remains on restoring competitiveness in laundry, where we are seeing early signs of progress. In deodorants, we continued to gain share in a declining market impacted by a temporary shift in product formats. Our foods business delivered double-digit growth in Hellmann's, supported by the continued success of its flavored mayonnaise range. In Argentina, the macroeconomic backdrop remains unstable amid ongoing political uncertainty. We expect to see improvement in the region during 2026. Beauty and well-being underlying sales growth was 5.1% driven by strong volume growth of 2.3% and 2.7% from price. Our volume momentum remains very solid with a two-year CAGR of 4%. Dove Hair, Vaseline, Hourglass, K18, Liquid IV, and Nutrafol all delivered double-digit volume-led growth, reflecting the strength of our premium innovations and disciplined execution. Hair care was broadly flat. Growth in our premium portfolio was offset by declines in clear and sun silk, which were impacted by soft market conditions in China and Brazil, and by lower TRESemmé volumes in the US, where we have pricing and promotional corrections in place to support improvement. Core Skin grew mid-single-digit, led by Vaseline, which delivered double-digit growth in both sales and volume. Growth was supported by premium innovations such as the new Cloud Soft Light Moisturizer in India. Prestige Beauty grew mid-single-digit, led by volume, as a category showed gradual recovery. Performance remained mixed, with Hourglass and K18 continuing to grow double-digit, while Paula's Choice and Dermalogica returned to low single-digit growth after declines in the first half. Wellbeing continued its exceptional run, delivering strong double-digit growth. Power Brand's Nutrafol and Liquid IV sustained their outstanding performance, supported by deep innovation funnel, increased brand investment, and selective international expansion. Perslicare underlying sales growth was 4.1%, driven by 1% volume and 3.1% price. The two-year compounded annual volume growth rate of 2% reflects the continued resilience across our core categories, supported by strong growth in Asia-Pacific Africa and in North America, which was driven by Dove. Premium innovations in deodorants and skin cleansing continue to lead growth with the rollout of whole body deodorants and the expansion of premium body wash, driving strong consumer engagement and share gains. Deodorants grew low single digit, led by Dove in North America. Growth was partly offset by weaker performance in Latin America, reflecting a decline in category volumes and a temporary shift in product formats. Skin cleansing grew low single digit, with commodity-related pricing weighing on volumes. Dove continued to perform well, supported by its premium innovations and the launch of a limited-edition seasonal body wash ranges. Lifebuoy grew low single-digit. Oral Care delivered high single-digit growth, led by our power brands CloseUp and Pepsodent, with strong momentum in Asia-Pacific Africa. In September, we further strengthened our personal care portfolio with the completion of acquisition of Dr. Squatch, expanding our presence in the fast-growing premium male grooming segment in North America. Homecare underlying sales grew 3.1% in the third quarter with 2.5% from volume and 0.6% from price. Volume growth stepped up versus the previous quarter, driven by sustained performance in Europe and improving trends across several key markets in Asia, Pacific, Africa. Fabric cleaning was flat overall. Europe grew mid-single digit as the rollout of Wonder Wash continued to drive volume growth and strengthen our competitiveness. Wonder Wash will reach 30 markets by the end of the year. This was partially offset by a decline in Brazil where the market conditions remained soft and we implemented corrective pricing actions. Home and hygiene grew mid-single digit with balanced contributions from both price and volume. Growth was led by SIF and Domestos, both delivering double-digit performances. SIF Infinite Clean, a multi-purpose cleaner powered by probiotics, has now been rolled out across major European markets and is delivering strong early results. Fabric enhancers grew high single-digit. Comfort delivered strong volume-led growth supported by the continuous success of its crystal-fresh technology. Foods delivered growth ahead of the market with underlying sales of 3.4%, with 1.3% from volume and 2.1% from price. Growth was broad-based across regions, led by strong brand execution. Condiments delivered mid-single-digit growth with positive volume and price. Hellmann's maintained its strong momentum with mid-single-digit growth, led by volume. This was supported by competitive growth in developed markets and by a particularly strong double-digit growth in Brazil, where Hellmann's is growing from strength to strength. Cooking aids grew low single-digit with positive volume and price. Knorr and Unilever Food Solutions both delivered low single-digit growth amidst subdued market conditions. Ice cream's underlying sales grew 3.7% in the third quarter with flat volume and 3.7% from price. Volumes were flat against a mid-single-digit comparator last year with a two-year compounded annual volume growth rate of 3.4%. Growth continues to be competitive, reflecting strong innovation, ongoing operational improvements, and disciplined execution across regions. Cornetto led with high single-digit growth, while Ben & Jerry's grew mid-single-digit, supported by the launch of new sundae flavors and a larger shareable pack format that is expanding the consumption locations. Now let me take you through the latest update on the ice cream demerger. All the preparatory work for the demerger remains on track, with the shareholder circular published on 2nd October and the approval of share consolidation received on 21st October. Due to the US government shutdown, the SEC is currently unable to declare the US registration statement effective, resulting in revisions to the original timeline. We remain committed to and are confident of implementing the demerger in 2025, and we will share further updates as soon as practicable, once there is greater clarity on the timing. Let me also now explain how the demerger and the share consolidation will work in practice. As a part of the demerger, shareholders will receive one share in the Magnum ice cream company for every five Unilever shares they hold. Following the demerger, we will carry out a consolidation of Unilever shares to maintain comparability between Unilever share price and key per share metrics before and after the demerger. This is a standard technical adjustment in transactions of this nature and the final ratio will be confirmed shortly after TMICC shares begin trading. Importantly, Unilever is expected to pay quarter four dividend in full, ensuring continuity for our shareholders through the completion of the ice cream demerger. Turnover for the third quarter was Euro 14.7 billion, down 3.5% year on year. Underlying sales growth of 3.9% was more than offset by a negative currency impact of 6.1%. We now expect an adverse currency impact on full year turnover of around 6% and a 30 basis points on the underlying operating margin. Portfolio changes also reduce reported turnover with an impact of negative 1% from net disposals. Acquisitions contributed 0.5% led by strong double-digit growth from K18 and Wild, and supported by the addition of Dr. Squatch following the completion of its acquisition in September. This was more than offset by a negative 1.6% impact from portfolio disposals, including the vegetarian butcher, which was completed in September. With that, over to you, Fernando.

Thank you Srini. Let me conclude by saying something about how we see the remainder of the year. In short, our outlook is unchanged and that applies both including and excluding ice cream. In either case, we expect underlying sales growth to be within our 3-5% multi-year range. Growth in the second half will be ahead of the first half. This despite some softness in certain markets, notably Latin America. Overall, we expect we will continue to outperform our markets with a strong competitive performance in developed markets and an improved performance in emerging markets. Volume growth in quarter four should be at least in line with quarter three. On the bottom line, we continue to expect an improvement in underlying operating margin for the full year, with second-half margins of at least 18.5%, or at least 19.5%, excluding ice cream. Of course, we will continue to monitor external events closely in what remains an uncertain environment. Finally, on the back of a strong quarter, we are looking ahead to the rest of the year and into 2026 with confidence and resolve, Unilever is changing, fast, under the strategic priorities we have set out. The portfolio is stronger, with more beauty, more well-being, more personal care. This quarter saw beauty and well-being up 5.1% and personal care up 4.1%. The shift to premium and digital commerce is accelerating, both organically and through M&A, as per the recent acquisitions of Wild and Dr Squash. Our anchor markets are delivering superior growth. Our U.S. business has now posted five consecutive quarters of strong volume-led growth. The performance expectations we are placing on people within the company are higher, with clear accountability and real differentiation in our incentive outcomes. And our commitment to make Unilever a marketing and sales machine permeates everything we are doing. From the acceleration of desire at scale in elevating our brand portfolio to the significant investment we are making to step up execution and excellence in every part of the business. In short, we are crystal clear on what we need to do and where we want to invest. We will not be diverted from these priorities. As we look ahead, it is clear that some markets and categories will remain soft for a while. But we have put Unilever on a stronger footing and are increasingly confident in our ability to continue outperforming markets, whatever the conditions. With that, thank you for listening and we are looking forward to taking your questions.

Good morning. Many thanks for joining the call. If you would like to ask a question, please press star one on your keypad. If you no longer wish to ask a question, press star two to exit the queue. When it is your turn to ask a question, your name will be called out. And finally, please keep your questions to a maximum of two.

Our first question comes from Warren Ackerman at Barclays. Go ahead, Warren.

Yeah, good morning Fernando, Sharini, Gemma, it's Warren here at Barclays. So I've got two and one housekeeping. The housekeeping one, on the clarification on volume, at least Q3 level, can you just confirm, Fernando, you're confirming also 2% volume growth into 26 as well. So just looking forward. And my two questions are, firstly, North America, really super growth, very impressive growth. Can you talk a bit about the growth of the well-being, the prestige and well-being unit within North America? There's been some investor concerns that liquid IV might be plateauing and you've seen a recovery in the prestige piece. Maybe you can talk a little bit about what's happening. with Polish Choice and Dermalogica and sort of the look forward in North America. And then a second one on Latin America. I mean, clearly the macro is tough, but there seems to be some self-inflicted issues in Brazilian laundry powder, Brazilian deodorants. Can you explain a little bit your actions you're taking, what learnings you've made? I think you've been in the region yourself. Is there a risk that you've taken too much pricing in Latin America to hit hard currency FX? And what reassurance can you give us that, you know, we won't see... that in other EMs. And as we look forward on LATAM, can you maybe give some clarity on the pathway forward and the growth you expect in LATAM in 26? Thank you.

Thank you, Warren. Good morning, everyone. Well, let me start by North America. And I feel the performance that we are having there, you know, with five consecutive quarters now of volume growth of up 4%. And at a time in which markets, you know, are visibly tougher there, I believe it's a reflection of the profound transformation we have done in our portfolio. You know, the setup of a U.S. for U.S. innovation model and a huge focus in strength and in relations with key retailers. I mentioned that in the last call. For the first time in many, many years, we have ranked number one in personal care, number one in food, and number three in beauty in the most popular survey with the top 130 retailers in the US. And that basically shows our ability to make markets in that region. Regarding performance of beauty and well-being there, it was really strong. Well-being continued having an exceptional performance in the US. Double digit growth both in Liquid IV and Nutrafol. Both brands are approaching their $1 revenue mark for the year. Prestige Beauty has improved after a relatively flattish first half. We deliver mid-single digit growth, but we don't take that seriously. as a new trend, I would say. Very good growth in Hourglass, very good growth in K18, in the most premium part of Prestige. And Paula's Choice and Dermalogica back to growth, but low single digits. So these are our main Prestige beauty brands there. But also, our Korean skincare was solid with very, very good performance in DAF. and Vaseline there. We have some issues in hair care in the US. We decided to release some brands that is having some impact in our growth in hair in the US. The likes of Axe Hair and Lab Beauty and Planet are in process of the listing. That was a conscious decision. We didn't believe that these brands were sustainable and we decided to release them. About Latin America. Well, you know, indeed it has been a very weak quarter for us in Latin America. It's a combination of markets under pressure due to a deteriorating macro, broad-based price increases to deal with currency depreciation. and as i have already mentioned previously we scored a couple of phone goals there you know the three major latin american economies are under pressure different reasons you know in brazil the level of household debt and the interest rates are extremely high remittances in mexico and down argentina contraction in consumption and run against the local currency in the short term And as a result of that, we have seen the market really going down significantly. If you look in volumes, in H1, 24, volume growth of 7%, H2, 3%, flat in H1, negative in quarter three. But there are definitely a couple of own goals. In London, Brazil, we went too far in our pricing. Historically, our competitors in powders in Brazil tend to follow us in a period of 8 to 12 weeks. That was not the case. We have corrected that. We are starting to see significant improvements in our sell-out. And on top of that, the market is really shifting very quickly to liquids, and we have introduced in quarter 3. Our very successful European Wonder Wash mix, so we expect competitive in laundry to progressively improve. And the other big category we have in Brazil, particularly deodorants, in that category we have been gaining substantial market share in the territory of 200 basis points there. But we did it boosting our contact applicator formats at the expense of aerosols. And this has had some negative consequences in the overall market growth because the revenue per use of aerosols is significantly larger than the one of contact applicators. So, reignited growth in the aerosol format is crucial. The plans are in place and there are clear learnings from these two issues that we have had. we will be sure of not repeating that anywhere else. So that's basically to say about Latin America. We don't expect, we expect that we will see improvement in Latin America during 2026. At this stage, I don't want to commit to more than that. Regarding the long term Ambition, we continue thinking that it's absolutely possible for us to deliver 2% market volume growth. In the long run, our combined categories and geographical footprint offers around 2% market volume growth, even if at this moment it is more in the 1% territory. But we are outperforming markets very clearly in Europe and the US, and in D&E we see a significant progress, particularly in Asia.

Thank you. Our next question comes from Guillaume at UBS. Go ahead, Guillaume.

Good morning, Fernanda, Srini, and Gemma. Two questions for me, please. The first one is on pricing. I mean, we're having a relatively benign commodity cost environment. You also flagged a relatively weak consumer environment in some key countries like Brazil, where you mentioned some pricing adjustments. So given this backdrop, do you expect price growth to remain at current levels or to actually come down over the coming quarters? So any color on your price growth outlook would be very helpful. And then my second question is on Europe. I mean, volume growth turned slightly negative in the quarter. Could you talk a little bit about the drivers behind this? Is it just down to this very elevated basis of comparison, and so nothing to see here, a volume to return to positive territory from next quarter, or on an underlying basis, are you maybe seeing some changes in category growth or in consumer behavior? Thank you very much.

Thank you, Guillaume. Xenia will help me with the pricing question. In Europe, we have positive volume when you exclude ice cream in the quarter. So, again, it's a very tough comparator. We delivered 7% volume growth in Europe in the same quarter last year, so the comparator was very, very tough. I believe you read the same information that we read, and you see that we are gaining significant share in Europe, particularly in home care and personal care, that are two of our most sizable businesses in Europe. So, our innovation in the premium segment is really working very, very well there. We are very confident about our prospects in Europe, but the comparator was very, very tough. Our share gain is solid, is broad-based. In the top five markets in Europe, we are gaining share. We are very pleased overall with the performance that we have structurally in Europe. In the case of pricing, and she will help me with that, it's true commodity cost is relatively benign, with the exception of a few family of materials, palm oil in particularly is increasing significantly. This has significant implications in HPC liquids, home care, personal care, and beauty liquids, and also in skin cleansing bars. Aluminium is going up. But I feel it's important also for you to remember that wage inflation is significant. You see wage inflation in Europe and in U.S. in the territory of 4%, and we need to cover for that also. Srini?

So two additional elements to that, Guillaume. Clearly, the inflationary pressures, as Fernando said, in skin cleansing are higher. However, when you look at something like a home care, it's quite benign with crude sitting at around the $60 mark. Having said that, when we really look at the total net material inflation, which is a composition of the materials and forex devaluation, that's another important element to see that in all the emerging markets, the currencies have devalued and therefore there is that imported inflation. Give or take, we see that net material cost should be about half a billion for this year. And we expect similar levels for next year, given the information that we have now. This will really warrant a sensible pricing. This is lower than what we have seen, the historical averages of 200 to 300 million. but it's a little better than that, but obviously much lower than what we experienced with the COVID period. So in essence, if you really think about those levels of inflation, there is price in the market and there is price clearly in some categories. The only last color is that when it comes to beauty, given the value chain, I think the bigger impact for us will really come from price and mix together because with premium innovations and what we are bringing to the market, we have the propensity and the ability to price up and we will do that in a sensible manner.

Thank you. Our next question comes from Olivier at Goldman Sachs. Go ahead, Olivier.

Hi. Good morning, Fernando, Rini, and Gemma. Just two questions, please. First, within hair care and particularly in the U.S., trisomy has been struggling for a couple of quarters. Is that still expected to continue into Q4 or has it improved already by the end of Q3? And how much of an impact it had on price mix in the U.S.? ? And then just lastly on Liquid IV, could you perhaps give us a bit of an update on the global rollout of the brand in how many countries you're expecting to launch it? Not necessarily, obviously, in Q4, but also into 2026. And which geographies will be the priority? Thank you.

Thank you, Olivier. Regarding hair care in the U.S., this year we entered with two significant relaunches. One was the Dabhair one, and the other one was Tresemme. Both imply significant repositioning of both brands. In the case of Dabhair, it has been an incredible success, you know, growing double-digit in the U.S., significant reposition in terms of pricing, much closer to the average of the market. In the case of Tresemme, that didn't work in the same way. But we have corrected that, and in the quarter three, Tresemme is back to growth with particularly good performance in styling. So we are confident in the trend that we are seeing in Tresemme and in hair care in the US. The main issue in the US, I would say, when you look at hair care performance, has been the delisting of some of the brands. But this has been a conscious decision. In the case of Liquid AB, excellent performance in the US, as I mentioned before. The brand is really approaching the 1 billion mark with double digit growth in another quarter. The brand has been rolled out now to eight markets, particularly in Western Europe, Australia. We are starting to introduce the brand in urban India. you know, the initial results are very, very good. Of course, Canada was launched last year also.

Thank you. Our next question comes from David Hayes at Jefferies. Go ahead, David.

Thanks, Gemma. Good morning also to Thomas as well. So firstly, just on kind of broader questions, I guess, so just in terms of the margin levels, India, Indonesia, you're seeing signs of improvement, but you've obviously taken quite a dramatic step in terms of profitability as you invest in those areas. So the question is, is that something you need to do more in other markets? I guess going back to the hard currency question that we had earlier, 2019 margins, which is kind of where you're getting back to, you've had two previous CEOs say that was too high. Why is that the right level now? And is there something that needs to be done in other markets to try and re-stimulate the volume growth, as you've seen in those two areas? And the second one, just to pick up what you talked about a few weeks ago in Boston, the eight power brands focus for the one Unilever market's You talked about not really supporting the other brands. Just to really get a bit more detail on that, is that a case of no A&P spend at all beyond those eight brands in those markets? Can you quantify what percentage of sales that leaves not being supported? And can you talk about what impact you think that might have on those brands in terms of a headwind to growth for a period of time? Thank you so much.

Thank you, David. I take power brands and then Shini will talk regarding margin. Power brands in one-year lever markets represent around 80% of the revenue. We want to take that into 90-95%. This doesn't mean that we will not use other levers of support of our local brands in these markets or that we will let these brands to die. But definitely, we don't want complexity in our portfolio in smaller markets. And this is a very decisive strategic move that we are doing. Our performance in one-year liver market has been very strong, consistently strong during this year. We have delivered another quarter of 4.9% with good volumes. Excellent performance in most of the geographies. And definitely we are really concentrating our efforts in rolling out our... um strongest brands usually three in beauty two in personal care one in home care and one in foods in most of these markets and this is a conscious decision that we are doing of course when there are local jewels we will protect them we will support them we will use our drivers of demand in all these cases marching

So, David, I think it's important to appreciate what is different in the way we are thinking about our profit and profitability. The six or seven levers that we are today exercising are significantly different. We've talked about the importance of volume growth, that the 2% volume growth of the anchor actually then starts to provide a leverage for us across the value chain, and that starts to become an important contributor. Given the work that we have done, whether it's in terms of the portfolio mix, the geography mix, the channel mix, or the format mix, mix is actually becoming a component which gives about 25 to 30 basis points on a regular basis for us. In the past, we have spoken to you about how we have reshaped The whole supply chain space, how we are actually buying, whether it's technology, whether it's game theory, Project Lighthouse is consistently enabling us to beat the market inflation by about 1%. When we look at the controlled cost element to it, again, serious amount of work which is happening in terms of reshaping the network of manufacturing and logistics. And we can go on. You've also seen how we have reshaped our overall overheads trajectory, where we have actually completed, we are well ahead on our productivity program, and actually now we are driving productivity as a habit and a culture in the organization, where our costs will be lower than our revenue growth on a consistent multi-year basis. And we are deploying capital, more than 55 to 60% of our capital today has gone towards savings initiatives. And we are actually looking at a lot more backward integration projects. So when we add up all of these elements, and also given the relative strength of our brands, this is what is enabling us to drive our margins differently. Equally, important to highlight that the margin profile, now we will be talking about businesses excluding ice creams, and ice creams at an aggregate was a margin diluter for us. So when we really look at a beauty, personal care and foods, very strong and healthy margins, given the footprint of home care and the positioning a little lower, but all of them are actually contributing in a sensible way. We are also really very focused on hard currency earnings because it's again a multi-year clear objective. And there when you look at it, we are also pulling all levers which includes below the line items such as taxation, pension, interest costs. All elements of the value chain today are in play. And I think what gives us this when we have a consistent business which is delivering day in and day out. margin expansion becomes very integral to the way we really think about growth and we think about profit. So a lot more confidence today is Unilever to continue to build our margins, drive hard currency earnings and get hard currency earnings, hopefully on a multi-year basis, which are ahead of our sales ambition.

Thank you. Next question comes from Sarah Simon at Morgan Stanley. Go ahead, Sarah.

Yes, morning. Just a question on the US. So we're starting to hear some sort of negative commentary from some of the consumer-oriented companies about the effect of the government shutdown. Just wondering if you are seeing any of that in your businesses. Thanks.

Thank you, Sarah. We have not seen any significant impact of the government shutdown at this stage in the consumer sentiment. Of course, we follow similar service that you follow. I feel the Michigan University consumer sentiment Service shows relatively low levels in the last metric, and we see a clear bifurcation in the market there between households that own stocks and households that don't own stocks. So I believe this explains probably the resilience of our premium portfolio in the US. And as you could see in our performance, we continue delivering significant volume growth in the US. We are very pleased with our performance there, but it's very clear that we are outperforming markets by a mile there.

Thank you. Our next question comes from Tom at Deutsche Bank. Go ahead, Tom.

Yeah, thank you. Morning, everybody. Just you mentioned in the presentation the growth of digital commerce and the channel shift in retail seems to be happening at an accelerated pace. Why would you be well positioned versus that channel shift? please, and any sort of details you could give. We've got a bit more of an idea of what's happening in the US, but some sort of views on the pace of that channel shift in Europe, perhaps in India and some of your other larger markets would be great, please. And just a quick one just on China, maybe any details on the improvement there and any impact of timing of Chinese New Year on Q4 growth, please. Clear.

yeah digital commerce is 17 of our revenue um i can give you some data we are growing amazon at 15 we are growing walmart.com at 25 we are going flip cart in india at 30 percent we are growing tick tock uh globally at 70 so our portfolio is much better suited now after the kind of reset we have done with disposers of value brands and with significant acquisitions in the premium segments digitally native brands that are operating with a lot of success they are and i believe one of the reasons that we are delivering the type of roles that we are delivering in the U.S. is that that's the portfolio with the highest exposure to e-commerce that we have globally. But we see similar trends in other markets, of course, China, India, quick commerce has had a lot. Our quick commerce business in India is more than doubling this year. So we believe that our portfolio is well suited. Our capabilities are significant in that space. A lot of capabilities that were acquired to the business through the acquisitions we have done are really helping us in all these markets. So, you know, we are very, very happy with the development of DECOM, particularly in beauty and well-being, in which the level of e-commerce is approaching 27, 28% for our total business. China, Srini, do you want to talk about that?

So on a China perspective, actually, it's quite encouraging for us. In the sequence of improvements, we had said that Indonesia will do much better, and it is doing much better. China, we said, just given the macroeconomic conditions, we said we are making some fundamental changes to our business model, our go-to market. are updating our capabilities in e-commerce and also actually driving the ongoing premiumization of the portfolio, particularly in beauty and well-being, Vaseline and home care. What's really encouraging is that in quarter four, all four of our business groups, I'm excluding ice creams given where we are, have actually returned to positive growth, both from value terms and on volume terms. And just given the fundamental work that we have done, it positions us well going forward. Of course, as Fernando referred to, there is more work to be done in some of the channel shifts which are happening, notably Dayan and what does it really mean to compete. And that's where we are spending a lot of time and effort to really make it strategic, make it important, and really play the full six piece to win in that channel. But overall, I think given where we are, we are confident in terms of our progress going forward.

Thank you. Next question comes from Jeff Stent at BNP. Go ahead, Jeff.

Thank you, Gemma. Two questions, if I may. The first one is, could you just shed a little bit more colour on Mexico, which I think was down high single digit? You know, what's happening there beyond the macro? And then secondly, do you still expect to grow hard currency earnings this year? Thank you.

Yeah. Mexico, we have seen soft markets there. If you look at the performance of the main retailer in Mexico, I feel in the last two quarters was around 1% and 4%. And that has basically reflected the fact that remittances reduction are having a significant impact in the economy, tariffs have created uncertainty, and the GDP growth expected there is around 0.4% in the last number I have seen there. So our competitiveness is strong in Mexico, so we don't have significant issues there, but we have seen market is really, really softening. And there are some significant promotional periods in Mexico, particularly during July. It's called July for free. Most of the retailers have significant activities and the pickup in that period has been relatively poor. So the macro in Mexico is not very good. We don't have any fundamental structural issue in our portfolio in Mexico. Our performance has been good. We have a great food business with Nordair. We have an excellent deodorant business. And they are very, very solid in shares. But the market has been soft. Hard currency earnings?

Jeff, an important element for us is the gross margin trajectory and investment behind our brands. On both these elements, we are making solid progress. In fact, we had said that the 45% gross margin, all businesses included, end of last year was really the base for us. All the three quarters, we have made continued progress. I've already explained to you some of the levers and the drivers in this respect. We are continuing to invest significantly behind our brands. We've said that we will continue to increase absolute spends every year. Even this year, we'll be actually increasing our absolute spends and our percentage of BMI will be in the range of 15 to 16%. What's really helping us is significant amount of work that we've done in terms of productivity across the value chain. Our program on productivity, we've already confirmed, is about 650 million of savings. We are looking to push that harder and get more out of that. We're going to be very disciplined in terms of our costs, which are within our control. That's going to become an important lever for us. We have done significant amount of work and found efficiencies in the taxation line. We've also had benefits coming through from our interest line. Summary, all these put together, we are confident of really having positive hard currency earnings in the current year.

Thank you. Our final question comes from Ed Lewis at Rothschild. Go ahead, Ed.

Yes, thanks very much. Just a couple of questions really just on Indonesia and China. Fernando, could you just put into the context how you feel about the performance, how good or bad, whatever, the 12.7% growth in Indonesia is relative to your expectations and also on China backing growth in Q3. I think that might've been a bit earlier than we might've expected. So just the changes you've made there, how they're having an impact and how you'd assess performance there.

Well, thank you, Ed. In Indonesia, we are very pleased with the renewed leadership team we have put in place there and the progress they are doing in resetting the fundamentals of the business. We are operating now with historic low levels of stocks in our distributors. We have removed any fundamental issue of channel price conflict that dragged us down in 2024. We are relaunching our top A brands in the market. We are stepping up significantly our social first marketing capability. You know, as a result of that, we are seeing our run rates in Indonesia improving consistently quarter after quarter. We initiated this reset around July, August last year, and the results are solid. So we expect Indonesia to continue contributing to growth in the next quarters. In China, I feel that Srinik has been clear about it. We are pleased that our four business groups for the remaining companies are back to growth in China. It's getting better slowly, the market there. We have made significant interventions to disintermediate our route to marketing e-commerce. We have set up significant manufacturing and logistics capabilities for direct-to-consumer delivery. And we are starting to see the benefits of these actions and we expect that to continue improving in the next few quarters.

Thank you very much. That was our final question.

That's good. Let me finish, Gemma, saying that I hope after the call it's clear that our major growth engines of beauty and well-being and personal care continue to deliver very strong performance, about 5% and about 4% respectively. Our shift to premium and digital commerce is accelerating. The performance in developed markets is strong. We are outperforming markets clearly both in U.S., in Europe, with U.S. being a clear standout in terms of our performance. Our emerging market performance is improving. India in particular is very, very well positioned over the medium term. The GST reform has had some impact in the short term, but we believe it's very good news for 40% of our portfolio with close to a 10% reduction. This will boost demand in the medium term. Indonesia and China continue to improve. There are lessons learned in Latin America that will not be repeated in the future. neither in Latin America nor in any other places. And our business in Latin America is structurally strong. It remains intact. And our shares have grown in six out of the last seven quarters there. All of these give us confidence for the remainder of the year in our ability to outperform markets and, as Shini mentioned, to deliver hard currency earnings growth. Thank you very much.